Global Courant 2023-05-09 13:53:48
Dubai, United Arab Emirates — Oil giant Saudi Aramco reported first-quarter earnings of $31.88 billion on Tuesday, down nearly 20% from the same period last year as energy prices fell on global recession concerns.
The company formally known as Saudi Arabian Oil Co. attributes the decline – compared to $39.47 billion in the same quarter last year – to lower crude oil prices. Aramco made a profit of $30.73 billion in the fourth quarter of last year.
“The results reflect Aramco’s continued high reliability, focus on costs and our ability to respond to market conditions while generating strong cash flows and further strengthening the balance sheet,” Aramco President and CEO Amin H. Nasser said in a statement.
Aramco said separately that it “believes it is well positioned to withstand fluctuating commodity prices through its low-cost upstream manufacturing.” Benchmark Brent crude was trading early Tuesday around $76 a barrel, down from a high of $125 last year.
Saudi Arabia’s vast oil reserves, close to the surface of the vast desert, make it one of the world’s least expensive places to produce crude oil. For every $10 increase in the price of a barrel of oil, Saudi Arabia will earn an additional $40 billion a year, according to the Institute of International Finance.
In March, Aramco announced it made $161 billion last year, claiming the highest-ever recorded annual profit by a publicly traded company, drawing direct criticism from activists amid concerns about climate change.
While saying Aramco was “working to further reduce the carbon footprint of our operations,” Nasser remained optimistic about global raw gas and natural gas needs.
“We are also moving forward with our capacity expansion and our long-term outlook remains unchanged as we believe oil and gas will continue to be critical components of the global energy mix for the foreseeable future,” he added.
That revenue came from rising energy prices after Russia launched its war against Ukraine in February 2022, with sanctions restricting sales of Moscow’s oil and natural gas in Western markets.
However, oil prices have fallen in recent weeks on fears of a coming recession as central banks in the US and elsewhere have raised interest rates to try to curb inflation. That’s even after OPEC+, a group of countries that includes the cartel and outside countries like Russia, announced surprise production cuts in April to a total of 1.15 million barrels. Recent OPEC+ cuts have led US President Joe Biden to warn of potential “consequences” for Riyadh, even as his national security adviser has just visited the kingdom and met with Saudi Crown Prince Mohammed bin Salman.
Aramco shares traded at $9.55 per share on Riyadh’s Tadawul exchange late Monday, giving the oil company a $2.1 trillion valuation and placing it behind only Apple and Microsoft for the highest market capitalization in the world. Only a fraction of its value, less than 2%, is traded on the stock exchange. The Saudi government owns 90% of the company, of which about 8% is owned by Saudi sovereign wealth funds.
Separately on Tuesday, Aramco announced it would begin issuing performance-based dividends to shareholders, in addition to those it already offers. The base dividend in last year’s fourth quarter was $19.5 billion, making it the highest in the world for a publicly traded company.
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Follow Jon Gambrell on Twitter at www.twitter.com/jongambrellAP.
